November 17, 2009 - One in two cigarettes smoked in Ontario is illegal (illicit, smuggling, black market), robbing provincial and federal coffers of more than $2 billion a year and raising concerns about children gaining easy access to tobacco. A study for the Canadian Tobacco Manufacturers' Council found that illegal cigarette purchases in Ontario have climbed to 48.6 per cent, followed by Quebec with 40.1 per cent. Canada-MAP..

Ontario and Quebec represent about 95 per cent of illegal tobacco sales in Canada, and about 33 per cent of cigarettes sold in Canada are contraband, according to the manufacturers' council study.Government officials and anti-smoking activists are alarmed because the cheap and easily available cigarettes will enable more children and teens to pick up the habit.

The Canadian Cancer Society is watching the situation closely. Rob Cunningham, a senior policy analyst at the Canadian Cancer Society, said widespread access to cheap cigarettes is undermining the effectiveness of tobacco control legislation and programs. "Higher prices are the most effective means of discouraging smoking, especially among teenagers, who are more price sensitive than adults," said Cunningham. "We would be seeing smoking rates go down much faster if we could get contraband under control."

Health advocates warn the historic decline in the number of smokers is starting to slow due to the availability of cheap cigarettes. Last year, about 18 per cent of Canadians aged 15 years and older were smokers. The previous three years it was 19 per cent.

Cunningham: "Ontario and Quebec have the lowest tobacco taxes in Canada, but the highest rates of contraband. (Federal tobacco taxes have not increased since 2002 and the main reason is contraband concern.) So contraband is not caused by taxes, it is caused by the proximity to the sources of supply." The major source of that supply is the Akwesasne native reserve that straddles Ontario, Quebec and the State of New York. Ten cigarette manufacturing plants on the U.S. side pump out billions of cigarettes annually.

"We know that perhaps 95 per cent of the contraband in Canada originates in illegal operations located on four First Nations reserves, the most important of which by far is the U.S. side of Akwesasne near Cornwall, Ont. There is also Kahnawake near Montreal, Tyendinaga near Belleville, and Six Nations near Brantford," said Cunningham.

Because of the international border issues and sensitivities surrounding First Nations, the Ontario government concedes that fighting contraband tobacco is "huge" and "complex."

Federal Public Safety Minister Peter Van Loan, whose government has been criticized for inaction, insists Ottawa is taking the matter seriously. "Obviously, contraband tobacco is a major concern," said Van Loan, noting it is worrying for reasons beyond just public health. "This is related to organized crime in a significant way," he said, touting the Conservative government's anti-contraband strategy, which includes beefed-up policing. "It's interesting to note that this year I think seizures are up dramatically, both in dollar terms and in quantities, so that plan is working," said Van Loan.

Some of the money earned from the sale of black market smokes is fueling firearm and drug smuggling efforts by organized criminal groups assists Gary Grant, a former Toronto cop, who heads of the National Coalition Against Contraband Tobacco.

The RCMP (Royal Canadian Mounted Police), assisted by the Ontario Provincial Police, is trying to stamp out the illegal cigarette trade. But the Mounties complain that while they are doing their best to round up the smugglers, the courts go far too easy on them. RCMP Sgt. Michael Harvey said fines of $50,000 to $100,000 are assessed, but the courts allow them to pay $10 to $50 a month. And, even then, the scofflaws don't bother.

The Canadian Coalition for Action on Tobacco has recommended ways Ottawa can tackle the problem: * Work with the U.S. to shut down the illegal, unlicensed factories on the American side of Akwesasne. * Prohibit the supply of raw materials including raw leaf tobacco, cigarette packaging, filters and rolling paper, to anyone without a valid tobacco manufacturer's licence. * Promote with First Nations the benefits of having a native tobacco tax equal to the provincial one. * Increase penalties substantially to deter would-be smugglers and manufacturers.